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Rights in Computer Software under Federal Goverment Contracts

Retaining Rights in Computer Software under Federal Government Contracts

If your organization contracts with the federal government for the delivery of computer software, you need to know the details of government regulations which govern what rights are granted to the government and what rights you may retain in your work product. 

Contracts with federal government agencies are governed by the Federal Acquisition Regulations (“FAR”) (  Section 27 of FAR sets forth the basic rights of both the contractor and the government in various types of intellectual property, including computer software, delivered under contract.  A review of the contract documents will always be necessary to determine what rights are claimed by the government. 

The basic rights granted to the government in computer software come in two categories: unlimited rights and restricted rights.

Unlimited rights means the government has the right to use, disclose, reproduce, prepare derivative works, distribute copies to the public, publicly perform and display the material in any manner and for any purpose it desires.

As the contractor and creator of the software, you will retain certain rights to the same data in which the government obtains unlimited rights.  The rights retained by you are basically the same rights as those obtained by the government: the right to use, release to others, reproduce, distribute, or publish any data produced or specifically used in the performance of the government contract; however, you will not retain the right to prepare derivative works of the software. 

You also retain the right to protect the data from unauthorized disclosure, add or correct various rights granted to the government, add or correct copyright notices and to take other appropriate action, in accordance with the contract and establish claim to copyright. 

All of these rights are the basic rights set out in FAR, but all can be modified pursuant to your contract with the government.

The Government shall obtain these unlimited rights in software supplied by contract that is first produced in the performance of the contract, and also in data that is considered form, fit, and function data.  Form, fit and function data in relation to computer software means data identifying source, functional characteristics, and performance requirements but specifically excludes the source code, algorithm, process, formulae, and flow charts of the software.

Restricted rights are obtained in computer software that has been developed at the contractor’s private expense and that is a trade secret; is commercial, financial and confidential, or privileged; or is copyrighted computer software.  The government is also granted restricted rights in any minor modifications made to such computer software.

Pursuant to FAR, restricted computer software shall not be used or reproduced by the government, or disclosed outside the government, except that the computer software may be (i) used or copied for use with the computer or computers for which it was acquired; (ii) used or copied for use with a backup computer if any computer for which the software was acquired becomes inoperative; (iii) reproduced for archives or backup purposes; (iv) modified, adapted, or combined with other computer software;(v) disclosed to and reproduced for use by support service contractors; and (vi) used or copied for transfer to a replacement computer. 

Restricted computer software can all be used in accordance with the terms contained in the contract, without any disclosure prohibitions, if the computer software has been published and copyrighted by the contractor.

Whether the computer software that you provide to the government is produced under the contract or is software that was developed at your own private expense, if you have copyrighted or intend to copyright such software, FAR requires that you grant the government a license in the software.  The basic license that is granted to the government shall be a fully paid, nonexclusive, irrevocable, worldwide license to reproduce, prepare derivative works, perform publicly and display publicly by or on behalf of the government.

The provisions set forth in FAR related to intellectual property are numerous and may be changed by the terms of the contract itself.  The provisions of supplements, including DFARS which applies to certain DoD agencies, may modify or supplement the terms of FAR.  If you enter into a contract with the government to produce intellectual property, make certain that you review both the contract and all relevant FAR provisions so that you will be aware of your rights.

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